Bank of Canada Raises Overnight Lending Rate

Canada’s central bank raised its key interest rate by 25 basis points to .75 percent today, in response to signs of a strengthening economy in this country. However, the bank stated that continued instability in world markets could preclude another rate hike on September 8, when it makes its next rate announcement.

In its accompanying statement, the Bank of Canada also revised its forecasts for economic recovery – predicting slower growth than estimated in its April monetary policy report. Business investment and net exports in Canada will overtake housing investment and consumer spending as lead contributors to this growth.

Interest rates in Canada remain at record lows. To put today’s rate hike into context, the average, five-year residential mortgage lending rate in July 1985 was 11.75 percent according to Bank of Canada archives. You have to go back to the early 1950s to find five-year lending rates as low as they have been in recent months.

Living in Canada still has its advantages if you are financing debt. View this CBC.ca map to see how the central bank rate in this country compares to regions around the world.